The Positive Effects of Applicant Disclosure, and How to Enforce It
Applicant disclosure is an effective part of local government ethics
that is usually ignored. Usually it is officials who are required to
disclose potential conflicts of interest, either in the form of annual
disclosure statements, revised when circumstances change, or in the
form of announcements that they have a potential conflict and are
withdrawing from involvement in a matter.<br>
<br>
The principal burden should be on officials, but placing an additional
burden on applicants -- such as those seeking zoning changes and
contracts -- does two things, in particular. One, it makes applicants
think twice about their relationships with officials. If they are
required to publicly disclose these relationships and, if they do not,
risk losing their contracts or zoning approvals, they will be more
likely not to tempt officials, but instead deal with them on an
arm's-length basis.<br>
<br>
Two, it places a check on officials' disclosures. If officials know
their relationships will be disclosed, they will be more likely to
disclose them themselves.<br>
<br>
The principal value of applicant disclosure is to help prevent pay-to-play, where applicants feel required to give officials something in order to get something from the local government, whether a contract or a land use change. When applicants are required to disclose what they give, it's harder for officials to ask for, or expect, anything.<br>
<br>
The occasion for this post was <a href="http://www.sun-sentinel.com/news/broward/deerfield/sfl-deerfield-pier-b…
article in the <i>Sun-Sentinel</i> </a>yesterday, which noted that a
restaurant that had been given a contract by the city of Deerfield
Beach (FL) had not disclosed two sizeable campaign contributions to
officials who had voted on the contract. The city's applicant
disclosure requirement is new this year, but a <a href="http://www.deerfield-beach.com/documents/Planning%20and%20Growth%20Mgt/…
affidavit </a>and the complete ethics code were part of the restaurant bid package.<br>
<br>
The affidavit requires three disclosures:<br>
<ul>1. All campaign contributions to
sitting city commissioners in the past four years, as well as the
contributions of all officers, directors, and shareholders of a corporation
if the application is a corporation, or partners if the applicant is a
partnership, or members, whether general or limited, if it is a limited
liability company.<br>
<br>
2. All items that a regulated officer of the city is required to
disclose concerning any conflict, whether actionable or non-actionable.<br>
<br>
3. Any action that is a violation of the ethics code in reference to
the application and done with the applicant and/or the applicant’s
agents. Also what was done to rectify the violation (for example: if a
gift was given, asking for return of the gift.)<br>
</ul>
The principal problem with the applicant disclosure requirements (Section 5
of the <a href="http://www.deerfield-beach.com/documents/Planning%20and%20Growth%20Mgt/…
code</a>, page 14ff of the code) is that violation of the requirements
is "grounds for the City Commission to void or rescind any approval or
contract." This means that, in many cases, such as the current one, the
very people who are found to have had a potential conflict with the
applicants are the ones who vote on whether to rescind the
approval or contract. This is not a way to deal responsibly with a
conflict.<br>
<br>
According to the article, the city attorney said that the city
commission has three choices: "it could reject all the bids and begin
again, give the contract to
second choice David Weinstein, manager of Kelly's Ocean Grille, or let
JB's remain the winner." Nothing is said about the mayor and
commissioner who received contributions (and who happened to be the
only two who made the winning bidder their first choice) recusing
themselves from the votes on these three choices.<br>
<br>
This is why it is better to have a contract or approval automatically
voided if in violation of the ethics code. The commission or other body
is free to reconsider the approval or contract, but those who have a
potential conflict and did not declare it when the matter came before
them the first time would be required to recuse themselves, even if, as
here, the conflict involved perfectly legal campaign contributions.<br>
<br>
The City Ethics Model Code <a href="http://www.cityethics.org/mc/full#TOC56">applicant disclosure
provision</a> does not include disclosure of campaign contributions,
but <a href="http://www.cityethics.org/mc/full#TOC58">another provision</a>
does automatically void any contract that results in or from a
violation of the code. Also, <a href="http://www.cityethics.org/mc/full#TOC65">a third provision</a>
bars any contractor that knowingly violates the code from doing
business with the local government for three years.<br>
<br>
Other blog posts on applicant disclosure:<br>
<a href="http://www.cityethics.org/node/750">An L.A. case where
applicant disclosure would have made a difference</a><br>
<a href="http://www.cityethics.org/node/828">Applicant disclosure and
professional confidentiality</a><br>